ONGC May Invest $4.5B to Develop East Coast Blocks

Oil & Natural Gas Corp., which contributes the bulk of India's oil production, said Tuesday it may invest $4.5 billion to develop some of its deepwater oil and gas blocks off India's east coast by 2014-15.

The state-run explorer expects to get approval for the proposed investment from the upstream regulator, the Directorate General of Hydrocarbons, by January, according to ONGC's exploration director, D. K. Pande.

"This is a conceptual estimate. Actual figures will be known only after we develop a field development plan," Pande told reporters on the sidelines of an energy conference.

ONGC accounted for 67% of India's total oil production of 732,800 barrels a day in the first half of this financial year, which began on April 1, and 43% of the country's gas output of 26.66 billion cubic meters.

Still, the company faces a decline in crude oil output as its major fields are ageing and it hasn't been able to bring any new fields into production.

ONGC has previously said it expects its crude oil and gas output to start rising in the next two years. It forecasts its crude oil output to reach 562,300 barrels a day in the year ending March 2013, up 12.6% from its output last year.

Natural gas production is expected to rise 14% to 72 million standard cubic meters a day over the same period and further increase to 100 mmscmd by March 2016.

Pande said the east coast blocks, which mainly contain natural gas reserves, are likely to have a peak output of 25 mmscmd.

The Press Trust of India, citing Pande, Tuesday said ONGC plans to invest more than $10 billion to develop its gas discoveries, including ultra deepwater discoveries.

But Pande declined to confirm the $10 billion investment figure to Dow Jones Newswires, saying it would be finalized only after the company decides on the type of technology that would be used to extract the gas.

ONGC currently has 13 discoveries at the KG-DWN 98/2 block in the eastern offshore Krishna Godavari basin and four discoveries in a block in the Mahanadi basin, as well as a number of discoveries around these blocks, Pande said.

He said ONGC will prepare field development plans after getting investment approval from the regulator. The plans will take one to one-and-a-half years to formulate, after which the company will finalize its total investment plan.

ONGC holds a 65% stake in the KG block, while Cairn India holds 10%, Petrobras has 15% and Statoil 10%.

Pande said Petrobras and Statoil have expressed an interest to exit the block and are awaiting Indian government approval to do so.